Today’s GDP data release shows that the UK has officially re-entered recession. While this comes as somewhat of a surprise at the national level (consensus appeared to be predicting a small expansion of the economy), it is likely that some of our city economies re-entered recession before the first quarter of 2012.
Our most recent Labour Market Update showed that the claimant count has risen steadily over the last year in Derby. But it is not alone – its neighbours Nottingham and Mansfield have seen similar patterns, while Cardiff and Belfast have also seen steady increases. While the link between output and unemployment is not a straightforward one, it does suggest that these cities may have already been experiencing a double dip recession in the second half of 2011.
If the national economy is going to recover from a downturn that has persisted for four years now then it will require its cities to lead the way – they contain 58 percent of jobs and are responsible for 61 percent of output. The problem currently from a policy point of view is that very little is understood about where growth is going to come from, or how this will vary from city to city. This makes policy aimed at supporting economic growth more difficult to formulate. The Centre for Cities hopes to shed some light on this through research that we will release very soon looking at the make-up of the business bases of our cities, and setting out what this means for the policies that government and cities should be adopting to support stronger economic growth.
Watch this space.